Moratoriums not being used to stop Medicare fraud

Nearly one year after receiving powerful new authority to impose moratoriums that would prevent potentially fraudulent Medicare providers from joining the program, federal health officials have yet to impose a single one, according to top Senate Republicans.

Under the Affordable Care Act, the Centers for Medicare and Medicaid Services was granted broad power to impose moratoriums in regions where fraud is rampant or for certain types of providers such as medical equipment or home health care, sectors where billions of Medicare fraud dollars have been lost. Teams of federal prosecutors and health investigators have set up camp in nine fraud hot spots around the country including Miami, Brooklyn, Detroit, Houston and Los Angeles _ all obvious places to consider moratoriums.

Yet federal health officials inexplicably have not done so, according to Senators Chuck Grassley of Iowa and Orrin Hatch of Utah. Hatch is the ranking Republican on the Finance Committee and Grassley the ranking Republican on the Judiciary Committee. The senators sent a letter to federal health officials Tuesday urging them to use moratoriums as a tool to combat an estimated $60 billion a year in Medicare fraud.

The letter comes as fraud in the taxpayer funded program has become an epidemic in recent years, with providers billing Medicare billions for suspicious products and services including prosthetic limbs for patients with all their limbs, penis pumps for female patients or wheelchairs for dead patients.

"With so much evidence of Medicare fraud, CMS must use every weapon in its arsenal to weed out bad actors to shore up this program, safeguard our seniors and protect the American people's tax dollars. Now that CMS has the authority to suspend questionable providers and suppliers from Medicare, it's inexplicably failing to use it," Hatch said. "This makes no sense ... what's it going to take for this agency to step up and take action?"

Officials for the Department of Health and Services inspector general lobbied hard to make sure moratorium power was included under President Barack Obama's health care plan as officials focus on cleaning up fraud on the front end by preventing crooks from getting into the program in the first place.

In the past, CMS lacked the legal authority, for example, to decisively say no Miami Medicare medical equipment providers could enroll in the program for six months. Instead federal health officials tried to stall new provider applications from being processed, hoping to slow the number of providers flocking to high fraud sectors. But when providers inevitably complained, the agency had to process their paperwork. Experts say the new law gives the agency a badly needed tool to fight fraud, instead of wiggling around the problem.

CMS officials are working on ways to impose moratoriums that will halt fraudulent providers without harming legitimate providers or beneficiaries, said Dr. Peter Budetti, a CMS deputy administrator and head of program integrity.

CMS doesn't want to use a "one size fits all heavy handed approach" but is instead looking to see "where real risks are," he said.

The agency pointed out they are also using other tools under the new health law to fight fraud and recouped $4 billion in fraudulent payments in 2010.

The senators pointed out several obvious starting points for moratoriums in their letter to HHS Secretary Kathleen Sebelius.

In March, Daniel Levinson, Inspector General for the Department of Health and Human Services, testified before Congress about rampant fraud among durable medical equipment suppliers in South Florida.

His agency also recommended a temporary moratorium on independent diagnostic testing facilities in Los Angeles after a study showed $71.5 million in fraudulent claims from those facilities.

"It is not reasonable to suggest that CMS needs more time to study whether there is need to impose a temporary moratoria in certain geographical areas for certain provider and supplier types when ample evidence exists from the strike force activities to justify moratoria in these high fraud areas," the letter from Hatch and Grassley said.

Kirk Ogrosky, former head of the U.S. Department of Justice Health Care fraud enforcement unit, helped set up strike force teams in high fraud areas around the country. The teams have charged more than 1,140 defendants who they say have fraudulently billed Medicare for more than $2.9 billion since 2007.

Ogrosky said the new laws should be utilized but warned that criminal providers under a moratorium can still buy an existing company from someone else and forgo transferring the company name.

"CMS needs to learn that the real criminals view their rules and regulations as slight speed bumps. Moratoriums provide a decent roadblock. Unfortunately, crooks will just use some third party to sidestep the moratoriums, and health care providers are left with stiffer regulations," he said. "It takes commonsense policing to really stop criminal fraud."